Trends in Business Growth in Scotland

The research was undertaken to develop greater understanding around business growth in Scotland.

This note presents analysis of FAME data which highlights growth challenges across Scotland, which is impacting on Scotland’s ability to create and grow, more and larger Mid-Sized Businesses (MSBs1). Context is provided through comparisons to the rest of the UK, as well as other research findings.

Despite the number of Scottish MSBs and their total turnover increasing in recent years, their share of turnover and employment has declined. Scottish MSBs are falling behind with overseas owned MSBs playing an increasingly significant role. High growth is most common in smaller, younger companies (of less than £4m in turnover). Two growth blockages emerge among £5m-£10m companies which means Scotland has a greater percentage of its growth companies with turnover under £5m compared to rUK, and a lower proportion in every subsequent bracket. a) Challenge 1 – Achieving one year medium or high growth. Only 7% of companies in Scotland achieved and sustained any form of 10%+ turnover growth against 26% in rUK. b) Challenge 2 – Sustaining growth, especially sustained high-growth. 14% of all growth companies achieved further higher growth compared to 37% in rUK. Only 3% of all £1m-£70m companies in Scotland sustained high-growth, vs 18% in rUK. This suggests Scotland is different from the rUK; despite having a strong entrepreneurial and start-up system there is an inability to sustain high-growth performance. The ultimate consequence of this are fewer Scottish MSBs than achieved elsewhere.

No recommendations were made.